Indian Rupee: FOMC Decision Awaited

16 Mar 2022 , 09:14 AM

The Indian rupee is expected to stay cautious against the dollar on Wednesday, 16 March 2022 ahead of the FOMC March meeting. Dollar off its overnight highs and easing crude oil prices could lend some support to the local unit although sustained foreign fund outflows may weigh down the local unit.

On Tuesday, rupee settled 6 paise down at 76.60 against the dollar as investors turned cautious ahead of the FOMC meeting. At the interbank foreign exchange market, the rupee opened strong at 76.40 against the American dollar. However, it pared gains later to enter the negative territory as investors turned cautious amid intensifying Russia-Ukraine conflict. During the day, it moved in the range of 76.32 and 76.68.

Domestic equity indices settled with steep losses on Tuesday, ending their five-day winning streak. The barometer index, the S&P BSE Sensex, fell 709.17 points or 1.26% at 55,776.31. The Nifty 50 index lost 208.3 points or 1.23% at 16,663.30. Foreign portfolio investors (FPIs) sold shares worth Rs 1,249.74 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 98.25 crore in the Indian equity market on 15 March, provisional data showed.

Overseas, Asian stocks were mostly higher on Wednesday, though markets in mainland China struggled to recover amid the Covid resurgence in the country. China grapples with its most severe Covid outbreak since the height of the pandemic in 2020, with major cities scrambling to limit business activity. US stocks rallied on Tuesday as oil prices continued to drop further below $100 on hopes of an end to the conflict in Ukraine.

The gains came as traders continued to eye the latest with ceasefire negotiations in Ukraine and China Covid lockdowns that could wreak havoc on tech supply chains. Investors are anticipating a big Federal Reserve monetary decision Wednesday, in which the central bank is expected to hike rates by a quarter point, its first hike since 2018.

Meanwhile, the dollar index edged below 99, from as high as 99.415 at the start of last week. Treasury yields surged ahead of the Federal Open Market Committee decision.

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